In the corridors of the city hall, the dusty portraits of Lenin are piled up, waiting to be thrown out. Outside on the square, the statue of the founder of the Soviet Union still stands proudly in the familiar, faintly ludicrous pose. His left hand clutches his lapel, while his right arm stretches imperiously down the avenue that used to bear his name.

The city of Ekaterinburg - formerly Sverdlovsk, a closed city until the collapse of the Soviet Union - is suspended between the Communist past and the unknown future.

Boris Yeltsin's former power base in the heart of the Urals is more obviously Russian than cosmopolitan Moscow, nearly a thousand miles to the west. Ekaterinburg, which was at the heart of Soviet heavy industry, is less glitzy, and thus in a sense more significant. It has just held elections which may change the direction of Russian politics for years to come.

There are many reasons for pessimism. Giant plants like Uralmash which used to employ more than 50,000 people now one-third of that number. Despite new investment the survival of the engineering plant is still unclear. At Uralmash there is bitterness. "We're being plundered," said one engineer who has worked at the plant for 23 years. "We get nothing - and we have no prospects at all."

None the less, some in Ekaterinburg insist there are reasons for long- term optimism for the region - and, by extension, for all Russia.

First, the politics. In elections last month, the former governor of the region, who was sacked by President Yeltsin in 1993, was returned to office with twice as many votes as his opponent. The vote may come to be seen as a historic turning-point.

The official Moscow spin is that Eduard Rossel, sacked because he talked of creating a "Urals Republic", is a dangerous separatist. Mr Rossel's opponent, the incumbent, Alexei Strakhov, included references to Chechnya in his campaign rhetoric, implying this would be the region's fate if Mr Rossel won. In short, "classic Soviet propaganda", according to Anna Trachtenberg, a sociologist at an independent polling organisation in the city.

Foreign observers in Ekaterinburg agree with her dismissive verdict. "This is decentralisation, not splitting up," said one of the Western advisers now based in the city. "We should all be in favour of that."

Arguably, one sign of progress is that the election took place at all. Until now, all regional governors have been appointed (or, as in Mr Rossel's case, sacked) by Moscow. Mr Yeltsin's officials insist that Moscow still needs "democratic commissars". Mr Rossel disagreed. In effect, he trusted the voters; Mr Yeltsin, who tried to prevent the direct elections from taking place, did not.

By organising free presidential elections in 1991, Mr Yeltsin dealt a crucial blow to the Communist system. Organising direct regional elections can be seen as taking Mr Yeltsin's achievement one step further in a country where most people still feel excluded from the political process. According to one of Mr Rossel's advisers, "This is an election of national importance: it shows the maturing of our democracy."

Historically, Russia existed as a single state only by creating a mixture of fear and lethargy from the Baltic Sea to the Pacific. The example of Ekaterinburg could help to break that pattern.